FPIC's New York Unit Sale Tugs at Stock's Recent High

By Basch, Mark | The Florida Times Union, October 9, 2006 | Go to article overview

FPIC's New York Unit Sale Tugs at Stock's Recent High


Basch, Mark, The Florida Times Union


Byline: Mark Basch

FPIC Insurance Group Inc. had been trading at its highest level in seven years recently, but the stock dipped a bit last week after the company announced the sale of a profitable business unit.

On Monday, Jacksonville-based FPIC announced the sale of its New York-based insurance management operations for $40 million in cash to a private company controlled by Anthony Bonomo, who has been the chief executive of those operations. FPIC said the sale allows it to focus on its main business of providing medical malpractice insurance in Florida and other states.

The sold operations provided management services for Physicians' Reciprocal Insurers, a New York-based medical malpractice insurer. Those operations accounted for $23.7 million of FPIC's $154.2 million in revenue in the first six months of this year and $5.3 million of its $18.8 million in earnings, according to a statement filed with the Securities and Exchange Commission. But FPIC sees some risks ahead in the New York market, so it said it was a good time to exit.

"We believe the operations were at the height of their profitability and franchise value," said a statement by FPIC President and CEO John Byers.

"The transaction we've completed allows us to exit on attractive terms based on our assessment of the operations' prospects and risks," he said.

Analysts agreed that it was a good strategic move for the long term.

"Based on the expectation that the growth and earnings power of PRI was due to decelerate at a fairly brisk pace, the timing seems to be right to divest that business," said a research note by Stifel, Nicolaus & Co. analyst Michael Paisan, who maintains a "hold" rating on the stock.

But the loss of earnings from that business is hurting the stock in the short term. FPIC's stock fell $1.82 to $38.10 Wednesday after SunTrust Robinson Humphrey analyst David Lewis lowered his rating from "buy" to "neutral."

Besides the loss of income from the New York operations, Lewis' research note also said the entire medical malpractice industry is seeing some softness, which could reduce growth in insurance premiums. But he still thinks the sale is a good long-term move for FPIC.

"In addition to having confidence in FPIC's management team, its disciplined underwriting strategy and the potential for reserve releases in the near future, we hold a favorable long-term view on FPIC. However, the significant EPS dilution from the sale and the recent gross premium burdens does not justify a Buy rating now, in our view," Lewis said. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

FPIC's New York Unit Sale Tugs at Stock's Recent High
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.